The diversity in the real estate sector is truly astounding, especially when one recognises that physical space is a universal need. Everyone needs it, and while residential real estate may be the most common form, it also has other applications. A prime example is Purpose-Built Student Accommodation (PBSA), which is proving to be a profitable, resilient choice. With increasing rental demand for student housing, PBSA stands as a safe, profitable low-risk investment in the broader real estate sector.

Why Invest In PBSA?  

According to Knight Frank, 2024 marked a turning point for PBSA in the UK, growing 14% from 2023. Total investment in 2024 reached £3.87 billion, with Q4 alone accounting for £575 million. In total, 66 deals were completed throughout the year.

This data aligns perfectly with official numbers from the Office for National Statistics – as reported by the Financial Times – with private rents rising by 9% across the UK. The financial publication also highlights research from the Higher Education Policy Institute (HEPI), which found that student accommodation rents in 10 university cities increased at nearly double the rate of university-owned housing, reinforcing PBSA as a profitable asset class.

Despite the sector’s viability as an investment option, an issue persists in its limited availability.  Although stock may be limited, the opportunity should not be overlooked.  To capitalise on the supply-demand imbalance, PBSA investors turned to developments.  

In fact, almost 50% of the deals in Q4 2024 were for development sites. For 2024, 22 development site sales were completed, accounting for one-third of total PBSA investment activity.

Institutional Confidence and the Role of University Partnerships

High-profile transactions included Greystar’s acquisition of a former hotel, which has since been converted into a 1,014-bed development in Manchester, as well as Cheyne Capital’s conversion of an office block into student flats. Additionally, Unite Students secured a £250 million joint venture deal with Newcastle University, adding 750 beds to the student housing market.  

As PBSA grows, universities are increasingly relying on private sector partnerships to expand existing student accommodation, allowing developers to secure cheaper land and long-term tenancy agreements while satisfying rental demand and ensuring steady profits.

As 2025 builds on what 2024 set in motion, PBSA investment is shaping up to be one of the smartest choices an investor can make for long-term returns, especially in cities with a larger student population.

While the British capital remains the top hub, other key cities are experiencing rapid student population growth. For instance, Glasgow, Scotland’s largest city, saw its undergraduate acceptance rate increase by 9% compared to 2023, meaning demand for student housing will rise. As one of the UK’s largest student hubs, Glasgow presents a prime opportunity for investors seeking stable, long-term returns in the PBSA sector. Knight Frank projects approximately around 200,000 beds to enter the UK student housing market.